JAI JAI RAM SINGH,BIHAR vs. INCOME TAX OFFICER, WARD-2(1), BEGUSARAI

The assessee is in appeal before the Tribunal raising the following grounds of appeal:

Brief facts of the case are that the assessee had filed the return of income for AY 2018-19 on 25.08.2018 declaring total income at ₹4,85,08,140/-. During the course of the assessment proceeding, the Assessing Officer [Ld. 'AO'] investigated the capital introduction of ₹5,77,74,943/-. The Ld. AO observed that the excess of capital introduced over the total income earned remained unexplained, as the assessee had failed to provide satisfactory documentary evidence to establish the identity, genuineness, and creditworthiness of the provider of the funds. Consequently, the Ld. AO made an addition of ₹92,66,803/- u/s 68 of the Act and assessed the total income of the assessee at ₹5,77,74,943/- u/s 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who considered the assessee's submission that the discrepancy was merely a rectification entry where profit was not transferred to the capital account in the previous year's balance sheet, but rejected this claim as according to him the balance sheet should tally at the year- end and no revised return of income was filed voluntarily. Accordingly, the Ld. CIT(A) confirmed the order of the Ld. AO and dismissed the appeal of the assessee vide his findings as under:

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Ld. AR drew our attention to page 50 of the paper book being para-2 of the assessment order as per which the Ld. AO considered the introduction of capital of ₹5,77,74,943/-, out of which he gave an allowance of the income disclosed during the year at ₹4,85,08,140/- and the difference of ₹92,66,803/- was added. The Ld. AR submitted that in the preceding year, the closing balance as on 31.03.2017 was ₹19,16,03,369.52 and our attention was drawn to page 20 para 4.5 of the written submission filed on 16.09.2026. It was ITA No(s). 358/PAT/2026 Assessment Year(s) 2018-19 Jai Jai Ram Singh. submitted that the opening balance as on 01.04.2016 was ₹16,41,11,202.21 on account of capital to which profit of ₹2,54,52,167.31 was added in the previous AY 2017-18 besides current liabilities of ₹40,000/- but the capital introduced was ₹5.77 Crore which was ₹2.54 Crore as per the profit and loss account and ₹3.30 Crore from other sources including salary of ₹3.23 Crore. Page 20 from the paper book is extracted as under:

1 It was submitted that the opening balance of capital 01/04/2016, was taken as the opening balance of 01/04/2017 instead of taking the closing balance and the profit and capital addition of the previous financial year 2016-17 were separately added as mentioned on page 58 of the paper book to arrive at the closing capital balance, which is extracted as under:

It was submitted that there was no discrepancy and the addition needs to be deleted. The synopsis of the written submission filed on behalf of the appellant is as under:

Income already offered to tax (Ground 7). The profit of Rs. 2,54,52,167 is stated to have been included in the revised return for A.Y. 2017-18. The appellant contends that taxing the disputed amount again merely because of its later transfer to capital would result in double taxation. Reliance is placed, inter alia, on CIT v. Murlidhar Jhawar and Puma Ginning and Pressing Factory, 60 ITR 95 (SC).

Opportunity, evidence and reasoned adjudication (Grounds 2-4).

The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be confirmed.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A) and note that the Ld. AO had merely reduced the income of ₹4.85 Crore from the capital introduced at ₹5.77 Crore and treated the difference as unexplained capital whereas the assessee has reconciled the same and there is absolutely no difference between the opening capital shown and that of the closing capital as on 31.03.2017. The capital introduced at ₹ 5.77 crore included the profit of ₹ 2.5452 crore of the previous year, capital introduced during the years and ₹ 3.3054 crore being salary of ₹ 3 crore, other sources of income of ₹ 23.70 lakhs and house property income of ₹ 6.83 lakhs. Therefore, it cannot be said that the entire amount of ₹ 5.77 crore shown as capital introduced was of the current year as a sum of ₹ 2.5452 crore related to the profit of the previous year for which necessary evidence has been filed and during the year under consideration only a sum of ₹ 3,30,54,327/- related to the capital Jai Jai Ram Singh. introduced on account of salary and other sources and a sum of ₹ 1.88 crore was the profit of the year. Therefore, there is no justification for upholding the findings of the Ld. CIT(A) whose findings are reversed and the addition of ₹ 92,66,803/- made by the Ld. AO and confirmed by the Ld. CIT(A) is directed to be deleted. Thus, Ground Nos. 5 and 9 are allowed and other grounds being general in nature or related to the addition made do not require any separate adjudication as relief has been granted on merits. Hence, the appeal of the assessee is allowed.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 16th October, 2026. [Yogesh Kumar US] [Rakesh Mishra] Judicial Member Accountant Member Dated: 16.10.2026 Bidhan (Sr. P.S.)